FX.co ★ Analysis of EUR/USD on January 28, 2021. Fed decides no easing of monetary policy in the coming months

The wave counting of the upward trend section still has a complete five-wave form. Thus, the current wave pattern suggests the construction of a new downward trend section. If the current assumption is correct, then the decline in quotes will continue with targets located around 19 and 18 figures. So far, there are no prerequisites for resuming the construction of the upward trend section.

The wave counting on a smaller scale also indicates the completion of the upward trend. The assumed wave 5-5 has acquired a completed form, and a successful attempt to break through the low of the assumed wave 4-5 indicates the instrument's readiness to build a minimum of a three-wave downward trend section. The first two waves of this part of the trend have already been built, now at least one more is expected. At the same time, a successful attempt to break the high of wave 2 will indicate that the markets are not ready for further dollar purchases, and the upward trend may become more complicated.

The meeting of the US Federal Reserve took place and the US dollar has no reasons for excessive optimism. All key parameters of monetary policy remained unchanged. The Fed will continue to buy securities from the market for at least $120 billion per month, the key rate remained at 0.25%. Thus, all hopes for hints from Jerome Powell to curtail or end the QE program did not materialize. Powell's rhetoric was also quite pessimistic, although it was absolutely expected. During an online press conference, the Fed chairman focused on the key parameters of the US economy. Once again, we heard that before tightening monetary policy, inflation should reach the level of "above 2%", and employment should return to pre-crisis levels. In this way, at the current stage, the economic recovery is still far from complete.

Powell also drew attention to the coronavirus pandemic, which continues to take the lives of people in America, with already 430,000 deaths, and the incidence rates remain very high. The epidemic continues to hamper the economy, and the pace of economic recovery has begun to slow in recent months. Powell also responded to a question regarding the $1.9 trillion financial aid package proposed by US President Joe Biden, expressing hope that the package will be approved by Congress. Also, the Fed itself is ready, if necessary, to expand the program of assistance to the American economy. In general, there was no talk at all about curtailing the incentive program. The US economy as a whole is recovering, but so far at an insufficient pace, and it is still far from its complete restoration. This conclusion can be drawn after the Fed meeting and Powell's speech. Thus, there was no reason for the markets to increase the demand for the dollar after yesterday. The greenback then only managed to rise slightly. An attempt to break through the low of the assumed wave 1 was unsuccessful, which increases the likelihood of a new upward trend section being built.

General conclusions and recommendations:

The Euro-Dollar pair has supposedly completed the upward trend. Thus, at this time, I recommend selling the instrument with targets around 20 and 19 figures for each new signal of the MACD indicator "down", counting on the formation of wave 3. However, now I also recommend waiting for a successful attempt to break the low of the assumed wave 1 before opening new sales of the instrument.